The objective of a recent "safe investor" study was to
evaluate mutual fund performance and to answer questions such as
"are investors likely to outlive their mutual funds?"
According to the study's findings, investors outliving their mutual
funds is a serious issue. Also, advisors and their clients need to be
aware of the impact of potential fund closures and mergers. Those
disruptions are rarely positive for clients as they involve transition
costs, portfolio management distraction and possible disruption to the
investor's asset allocation.

An analysis of historical data indicated the importance of four
factors:

Size: Larger funds are more likely to stay in business, a simple
matter of economics.

Performance: Funds with good performance track records are more
likely to survive.

Star ratings: The star system is in many respects a stronger proxy
measure for survivorship than it is for identifying future
top-performing funds.

Parent company stability: The fund's parent company is an
important, but harder to evaluate factor in survivorship.

SOURCE: DANIELS. KERN, CFA,

PRESIDENT AND CHIEF INVESTMENT OFFICER FOR ADVISOR PARTNERS, WHICH
CONDUCTED THE STUDY.

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